Eskimo Joe’s, designer of the world’s second best-selling T-shirt (just behind Hard Rock Cafe), borrows $21 million cash on November 1, 2021. Eskimo Joe’s signs a six-month, 7% promissory note to Stillwater National Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.
Required:
a. Prepare the journal entries on November 1, 2012, to record (a) the notes payable for Eskimo Joe's and (b) the notes receivable for Stillwater National Bank.
b. Record the adjustment on December 31,2012, for (a) Eskimo Joe's and (b) Stillwater National Bank.
c. Prepare the journal entries on April 30, 2013, to record payment of (a) the notes payable for Eskimo Joe's and (b) the notes receivable for Stillwater National Bank.
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